Social Media Security Deals Spur Radware Rally: Israel Overnight

April 19 (Bloomberg) -- Radware Ltd., the Israeli
technology company trading at double valuations relative to the
Nasdaq telecommunications index, rose to a two-week high in New
York after receiving orders from social networking companies.

Shares of the Tel Aviv-based company climbed 0.9 percent to
$37.26 yesterday, pushing valuations to 40 times reported
earnings, twice the average multiple for companies on the Nasdaq
Telecom Index, according to data compiled by Bloomberg. Prolor
Biotech Inc. led declines on the Bloomberg Israel-US Equity
Index. The gauge for the largest Israeli companies traded in New
York fell 0.1 percent to 89.12.

Radware, whose 27 percent gain this year has outperformed
the Nasdaq index’s rise, is benefiting from mounting demand for
security software after Sony Corp. and Citigroup Inc. were
targets of cyber attacks. Two U.S.-based social networking
companies will buy the technology in deals valued at “multi-million” dollars, Radware said in a statement distributed by
PRNewswire yesterday, without identifying the buyers or
disclosing the exact amount.

“Their solutions are becoming more critical,” Ashok
Kumar, an analyst at Maxim Group LLC who has a buy rating on the
shares, said by telephone from San Francisco. Radware’s entrance
into the social media industry is “expanding the opportunities
for the company,” he said.

Radware’s shares may rise to $40 in the next 12 months,
Kumar wrote in an April 16 research report. They gained 12
percent in New York last month.

Hackers

U.S. companies would have to boost cyber-security spending
to a group total of $46.65 billion, more than eight times the
current $5.3 billion, to achieve security capable of stopping 95
percent of attacks by hackers, according to a Bloomberg
Government study published Jan. 30.

Sony, Japan’s biggest consumer-electronics exporter, was
last year the target of online data breach when an attack
compromised more than 100 million customer accounts.

Citigroup, the third-largest U.S. bank, said about 3,400
customers lost about $2.7 million when their credit-card
information was breached by hackers last year.

Radware’s social media deals “signal an acknowledgment
that more U.S. businesses are seeing the value in our offerings
and have the confidence in our security solution to make them a
critical component of their network security plans,” Meir
Moshe, the company’s chief financial officer, said in an e-mailed response to questions yesterday.

Juniper Partnership

Radware last year announced a partnership with Sunnyvale,
California-based Juniper Networks Inc., a provider of
infrastructure solutions and telecommunication services.

The partnership will boost Radware’s share of the equipment
market that helps networks run efficiently, according to Maxim’s
Kumar.

“We expect the Juniper relationship to contribute up to
$10 million in the first year and expand in the years beyond,”
said Kumar, who projects it will also result in a 10-cent per
share increase in earnings for investors, according to the April
16 note.

Radware will probably report a record $191 million in
revenue this year, according to the median estimate of four
analysts surveyed by Bloomberg.

Under-performance

The Israel-US Equity Index has advanced 9.7 percent this
year, compared with a gain of 16 percent for the Nasdaq
Composite Index. The Nasdaq and the Standard & Poor’s 500 Index
fell 0.4 percent in New York yesterday as quarterly earnings
from Intel Corp. and International Business Machines Corp.
disappointed investors.

Telecommunication providers Internet Gold-Golden Lines Ltd.
and Cellcom Israel Ltd. led gains on the Israel-US Equity Index
yesterday. Internet Gold, the company that controls Bezeq
Israeli Telecommunication Corp., rose 3.6 percent to $6.40 in
U.S. trading. The shares in Tel Aviv fell 2.7 percent to 23.83
shekels, or the equivalent of $6.34.

Cellcom, the country’s largest mobile-phone services
provider, climbed 4.7 percent to $12.20 in New York. The
Netanya, Israel-based company declined 1.9 percent to 45.10
shekels, the equivalent of $11.99, in Tel Aviv today. The
benchmark TA-25 index rose 0.9 percent.

Concern that Israel will force telecommunication providers
to cut fees and encourage new players in the mobile-phone market
has kept telecom stocks down in Tel Aviv this year. The
companies jumped yesterday following a report in newspaper
Globes that the government may bar competitor Hot
Telecommunication System Ltd. from offering a services package.

Mellanox Profit Doubles

Mellanox Technologies Ltd., the Israeli maker of technology
used to transfer data quickly, said profit more than doubled in
the first three months of 2012, compared to a year earlier,
according to a Business Wire statement yesterday after the
market closed.

Net income excluding certain items was $22 million, more
than twice the $9 million recorded in the first quarter of 2011.
Sales increased to $89 million from $55 million a year earlier,
the Yokneam Elit, Israel-based company said.

Mellanox rose to $52.50 as of 5:50 p.m. in New York
yesterday following the close of the markets after falling 0.3
percent to $43.33 in New York at the close. The shares in Tel
Aviv jumped 26.8 percent to 207.80 shekels, the equivalent of
$55.26, today.

Israel, whose population of 7.8 million is similar in size
to Switzerland’s, has about 60 companies traded on the Nasdaq
Stock Market, the most of any country outside the U.S. after
China. The nation is also home to more startup companies per
capita than the U.S.